On February 3, 2022, a nine-count indictment was returned by a grand jury in the US District Court for the Southern District of Texas against Matthew Clark, a natural gas trader and former president of a natural gas trading company based in Houston, Texas. The charges included alleged violations of various provisions of the Commodity Exchange Act, and engaging in insider trading and prohibited commodities transactions.
Among other things, the indictment alleged that Clark conspired with Matthew Webb, Peter Miller, Marcus Schultz, John Ed James, Lee Tippet, and others to profit from the illegal use of material nonpublic information obtained by Clark in the course of his employment. Specifically, it was alleged that Clark misappropriated information about his employer’s trading interest in natural gas futures contracts, and used it to engage knowingly in fictitious transactions involving the purchase and sale of Henry Hub natural gas futures contracts. This caused prices to be reported with the commodities exchanges that were not true and bona fide prices, and resulted in a negation of market risk for those involved.
In addition, Clark is alleged to have received over $193,000 in kickbacks from Webb, the owner and president of Classic Energy, LLC, a Houston-based commodities brokerage, and to have concealed the payments by channeling them through third parties.
The indictment charged Clark with one count of conspiracy to commit honest services wire fraud, three counts of honest services wire fraud, one count of conspiracy to engage in prohibited commodities transactions and insider trading, two counts of prohibited commodities transactions, and two counts of insider trading. Alleged co-conspirator Miller pleaded guilty on February 3, 2022 to conspiracy to commit commodities fraud. In related cases, Schultz, James, Webb and Tippett have pleaded guilty to various charges, including conspiracy to commit wire fraud, conspiracy to commit commodities fraud, conspiracy to violate certain provisions of the Commodity Exchange Act, and conspiracy to commit honest services wire fraud.